Back in June, the government of China issued its 12th five-year, $300 billion plan for science and technology spending and included “biopharmacy, bio-engineering, bio-agriculture, and biomanufacturing” as priorities (China Daily). Of course, the announcement caught the attention of many who follow the biotech industry and prompted several dire commentaries. David Duncan of Forbes wrote “Will U.S. biotech become the next Detroit?” but then offered a more up beat conclusion that the US biotech/pharma industry will remake itself and continue to deliver product and profits (Forbes blog). My reaction was different. Given my interest in affordable products for global health, I wondered what markets the Chinese government had in mind for its burgeoning biotech industry.
According to the best report on the Chinese biotech industry I’ve seen, a 2008 study by Frew et. al (Frew et al. 2008), most of the industry’s current products are off-patent biosimilars (biologic drugs like interleukins, CSF, and hGH) that are sold domestically. But given the historical export orientation of Chinese companies, I expect that the government ministers and corporate execs are also considering paths to selling their knock-off biotech products into the well-heeled, reimbursed markets of the EU and the US at attractive prices. The challenge is that, in addition to the biosimilars industry being highly competitive with many existing players including the multinational big pharma companies (MNCs) (see my posts, “Generics Play” 9/15/11 and Biosimilar Fever 9/22/11), the pharmaceutical industry is highly regulated and every country is concerned about the quality of imported drugs and can easily throw up real and perceived barriers to product entry. Already the Chinese pharmaceutical industry, which exports about $30 billion of mostly API (active pharmaceutical ingredient) each year to drug makers including the MNCs, is under fire for poor quality and maybe dangerous manufacturing (Bloomberg article) and may need a costly reconstruction (American Enterprise Inst 2009 report).
It may be wishful thinking, but my read is that the Chinese economic group think is that China will become the world supplier of low-cost, maybe extremely low-cost, essential medicines, vaccines, and diagnostics for the vastly under-served healthcare markets outside the US/EU/Japan. The Chinese vaccine companies are already moving in this direction. Frew et al. reported on a handful of companies that are developing novel vaccines for both local and global health diseases, e.g.:
- Bio-Bridge Science, developing an oral HIV vaccine,
- Shanghai United Cell Biotech, selling an oral recombinant B-subunit/whole cell cholera vaccine, and
- Sinovac Biotech, developing an inactivated hepatitis A (HAV) vaccine (Healive) and a combined inactivated HAV and HBV vaccine (Bilive).
And in March, the WHO certified that the State Food and Drug Administration of China had met their standards for vaccine manufacture regulation, opening the door for approved manufacturers to sell to the WHO’s international vaccination programs (WHO press release). Of course, the world vaccine market is potentially lucrative (it is sized at $28 billion in 2010 , including for the public-sector vaccines which sell at $1/dose or less), but also is competitive (see my posts, “Bugs in the Ointment” 2/3/11 and “Greasing the COGs” 2/10/11). What may be the Chinese biotech/pharma industry’s role in supplying new, better, needed, and affordable drugs for the under-served?
As was announced yesterday, some clues may be provided next week at the G20 Summit at which the Chinese government and the Gates Foundation said they will more fully describe a new “partnership to support innovative research and development (R&D) and manufacturing of new products for global health and agriculture” (Gates Fnd press release). While I am skeptical of “partnerships” that don’t involve those entities that actually make products (like companies), the announcement is a strong signal that the Chinese government will be pushing its biotech/pharma industry toward products for global health. So for me, it’s not “Will US biotech become the next Detroit?” but will the US biotech/pharma industry reconfigure itself to sell affordable products in the global markets in less than the 30 years it took Detroit?